Apple’s share price yesterday rose to $193.98, a new record high, taking the technology company’s overall market capitalisation beyond $950 billion for the first time. Yesterday’s gain moves the iPhone maker to within touching distance of winning the race to become the world’s first ever trillion-dollar company.
Stock market and technology analysts reacted positively to a series of software updates unveiled at Apple’s annual developer conference on Monday they believe will increase customer loyalty. Despite slightly disappointing growth in iPhone sales, up just 3% over the most recent quarter, the announcement of a $100 billion share buyback programme and steadily increasing dividends has kept investors on board and optimistic. While the hoped for ‘supercycle’ of increasing sales of more expensive iPhone models has not quite materialised, revenue generated by other products such as the iWatch have also increased.
Apple’s share price has also benefited from a wider bull market for technology stocks. A correction for big tech a couple of months ago after the Facebook/Cambridge Analytica scandal and a seeming regulatory and tax crackdown led to fears the era of unbridled growth was over has proven short lived. Donald Trump’s stirring up of a potential trade war with China and Europe and troubles in the Eurozone around Italy’s attempts to form a new populist government have recently pushed investors back into ‘Faang’ stocks, which appear to have taken on safe haven status. The MSCI global technology index yesterday hit a record high, as did the Nasdaq tech index, and European technology shares also touched heights last seen during the dotcom boom.
Apples’s share price has now climbed 18% for the year-to-date and another 5% gain will propel the company’s valuation beyond the $1 trillion threshold. For those investing online in Apple stock and wondering if there is now any further space for short term growth, analyst forecasts are encouraging. A recent MarketWatch analysis explains that with a current P/E multiple of 18.5, Apple is still fairly valued and should not be considered expensive. The author of the analysis believes that the tech giant’s share price is currently pushing higher and won’t be expensive until next year when earnings growth is expected to slow to 11% from this year’s 18%.
With Amazon had recently looked like it may make a dash to catch Apple in the trillion-dollar race. However, now some way behind with an overall market capitalisation of just over $805 billion, it now only seems a matter of time, possibly not much, before Apple becomes the first company in history to reach the milestone.